The German Constitutional Court on Tuesday (May 18) dismissed a complaint against the European Central Bank’s (ECB) flagship bond-buying program, in a decision that prepares the eurozone economy for more stimulus once the The bank’s emergency measures related to the pandemic will end. EURACTIV Germany reports.
The plaintiffs, Bernd Lucke, a former member of the right-wing AfD party, and Peter Gauweiler, a former ruling CSU member, as well as a handful of prominent and longtime German critics of the ECB’s money printing programs , claimed the institution had not yet met the requirements set in the previous court ruling in May 2020. The Karlsruhe court ruled that lawmakers had not exercised sufficient control over the Bundesbank, which buys bonds on behalf of the ECB, and ordered the German central bank to leave the regime unless the ECB provides proof that this was necessary and appropriate.
The judgment on the ECB’s quantitative easing program for the purchase of public sector securities on secondary markets (Public Sector Purchase Program – PSPP), launched in 2015 to fight deflation, had caused unrest in Brussels and in Frankfurt since EU law, which was the basis for the adoption of the PSPP, is superior to national law and therefore also applies to the highest German court.
With this new decision, the Constitutional Court affirmed that the government and the Bundestag had carried out a sufficiently rigorous assessment of the proportionality of the PSPP in accordance with its previous judgment.
“The initial decision of the Constitutional Court of May 2020 was strong. The Bundestag and the government have credibly asserted that they had indeed fulfilled their monitoring obligations and wisely implemented a difficult decision of the Constitutional Court, ”said Markus Ferber, spokesman for the Party’s economic policy on Tuesday. European People’s (PPE).
“Today’s decision should now also be accepted by all parties in this form,” he added.
Friedrich Heinemann, of the Leibniz Center for European Economic Research, warned, however, that the decision “in no way definitively ends the European and constitutional dispute over bond purchases”.
“During the pandemic, the Governing Council of the ECB canceled many safeguards intended to prevent the prohibited financing of the monetary government,” he said, adding that the ECB was entitled to “this key role for financing of the State ”during a pandemic“ but certainly not after, ”warning that the Constitutional Court will continue to play its watchdog role in the future.
The fight goes on
“By now declaring the applications for an enforcement order inadmissible and failing to carry out its own factual examination, the Constitutional Court leaves uncontested the failure by the ECB, the government and the Bundestag to respect its judgment”, declared Gauweiler , whose request was dismissed.
Gauweiler also announced that he would not be discouraged by this decision and would continue to fight against “the insolence of the European institutions”.
According to Lucke, the second plaintiff whose request was rejected, “it is difficult to understand why the negative effects of the very expansive monetary policy of the ECB must remain secret”.
“Unfortunately, the Constitutional Court did not even have the courage to demand transparency for the citizen. If the ECB’s monetary policy does no harm, the ECB could publish its assessment after all, ”he added.
[Edited by Benjamin Fox]